Labor supply models: unobserved heterogeneity, nonparticipation and dynamics Specification in Labor Supply and Consumption Models.


This chapter is concerned with the identification and estimation of models of labor supply. The focus is on the key issues that arise from unobserved heterogeneity, nonparticipation and dynamics. We examine the simple ‘static’ labor supply model with proportional taxes and highlight the problems surrounding nonparticipation and missing wages. The difference in differences approach to estimation and identification is developed within the context of the labour supply model. We also consider the impact of incorporating nonlinear taxation and welfare programme participation. Family labor supply is looked at from botht e unitary and collective persepctives. Finally we consider intertemporal models focusing on the difficulties that arise with participation and heterogeneity.

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Research Papers in Economics

Last time updated on 06/07/2012

This paper was published in Research Papers in Economics.

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